The Ministry of Education is guilty of gross incompetence in administering the 2015 PISA test

The poor performance of Malaysian students in the Programme for International Student Assessment (PISA) in 2009, where Malaysia was ranked in the bottom third of all countries, was highlighted in the National Education Blueprint 2013 to 2025 (See Figure 1). Malaysia’s performance in the 2012 PISA test did not show significant improvement. Not surprisingly, there was much attention on the 2015 PISA test scores to see if the efforts of the Ministry of Education would be able to boost Malaysia’s performance in Reading, Mathematics and Science.

Unfortunately, even though Malaysia’s scores for Reading, Mathematics and Science did show an increase from 2012 to 2015 (from 398 to 431 for Reading, from 421 to 446 in Mathematics, from 420 to 443 in Science), Malaysia was not included in the 2015 PISA ranking. According to the 2015 PISA report, “In Malaysia, the PISA assessment was conducted in accordance with the operational standards and guidelines of the OECD. However, the weighted response rate among the initially sampled Malaysian schools (51%) falls well short of the standard PISA response rate of 85%. Therefore, the results may not be comparable to those of other countries or to results for Malaysia from previous years”.[1]

In a parliamentary reply to MP Tony Pua, on the 22nd of March, 2017, the excuses given by the Ministry of Education for this low response include: (i) students were not used to answering the questions using computers resulting in their response not being recorded and (ii) technical problems such as damaged data and data which were lost during the taking of the test.

These excuses are unacceptable for the following reasons:

The Ministry of Education had at least 2 years, starting in 2013, to prepare for the 2015 PISA test.[2]

This is not the first time which Malaysia is going through the PISA process. In 2009, the response rate for the students selected was 99.3% and in 2012, it was 100.0%. How was it that in 2015, the response rate had dropped to 51%?

Before the release of the PISA report, the Ministry of Education had given assurances that both students and teachers had been adequately prepared for the taking and administering of the PISA tests.[3]

The admission of these technical failures shows that the Ministry of Education was grossly incompetent in administering the 2015 PISA tests. In doing so, it has put Malaysia in an embarrassing situation of not being featured in the PISA rankings.

The Ministry of Education should not be boasting about Malaysia’s improvement in its PISA scores since the PISA report has clearly stated that our 2015 scores cannot be compared to past PISA scores. Instead, it should issue a detailed report on why the sample of schools included in the PISA test and explain why the response rate of 85% was not reached. Deputy Education Minister, Chong Sin Woon, promised in December 2016 that such a detailed report would be released but till now, we have seen no such report.[4]

Figure 2: Reasons given on why Malaysia only managed a 51% response rate for the 2015 PISA test

Media Statement by Dr. Ong Kian Ming, General Manager of Penang Institute in KL, on the 21st of December 2016

Note: Some newspaper reports on my statements during a PTPTN forum on Monday, 19th of September have been misreported. The recommendation to revise the 1st class waivers for PTPTN loans only applies to students from middle and upper income families. As it clearly states in the full report, 1st class waivers for PTPTN loans for students from low income families should be maintained. In addition, there were many other recommendations that were proposed in the Penang Institute report such as putting in an income threshold of RM3500 per month before one has to repay his or her PTPTN loan that was not covered in many of the newspaper reports)

PTPTN deficits is a ticking time bomb that needs to be addressed before it explodes

Between 1997 and 2015, 2,464,937 loans with a value of approximately RM55.83 billion were approved for students pursuing their higher education studies in Malaysia. While it is undeniable that PTPTN has been an important factor in increasing access to higher education for many Malaysians, the financial hole which PTPTN finds itself in is very serious and will become even more serious moving forward.

According to the PTPTN Annual Reports from 2011 to 2015, the agency had been making profits from 2011 to 2015 (RM18m, RM12m, RM21m, RM109 and RM401m in 2011, 2012, 2013, 2014 and 2015 respectively). Though seemingly encouraging, these positive profits mask serious underlying financial problems. In reality, PTPTN was only able make these profits due to substantial annual government grants, totalling RM6.456 billion from 2011 to 2015. Without the injection of financial support from the government, PTPTN would have suffered losses totalling RM5.894 billion from 2011 to 2015. (See Table 1 and Figure 1 below)

The amount of government grants has almost doubled from RM915 million in 2011 to RM1.715 billion in 2015, mostly to cover the growing interest payments which PTPTN has to pay out to banks and the EPF for the money it has borrowed from them. To give a picture, interest servicing costs as a percentage of total expenses reached a high of 81.5% in 2011 before coming down to 75.5% in 2015. Interest servicing costs reached a high of RM1.519 billion in 2015 (Figure 2 below).

(i) Conduct a comprehensive survey of PTPTN loan holders to accurately identify the reasons for the low repayment rate

This survey, which would be carried out by an independent survey firm, would collect data on the financial patterns of fresh graduates, such as the distribution of starting salaries, the type of jobs held vis-à-vis qualifications, other loan obligations besides PTPTN, daily and monthly expenses such as rent and other types of expenditure. The 2015 survey commissioned by PTPTN involved a very small sample of 200 respondents and did not include crucial information such as starting salary, type of course and the type of the IPTA or IPTS.

With more concrete data, PTPTN would be better-placed to introduce new policies such as income contingent loan repayments, variable interest rates and means tested loans (see below). Going a step further, the Ministry of Higher Education would be able to evaluate important trends such as completion rates in individual colleges and universities, as well as starting salaries of fresh graduates by course and individual colleges and universities. Overall, this would help in better planning for the higher education needs of the country moving forward.

(ii) Loan repayments should be contingent upon income

To ensure that low income earners are not excessively burdened by PTPTN loan repayments, graduates should have the option of repaying their PTPTN loans only if their monthly income exceeds a minimum amount, at say RM3500.[1] On top of this, monthly payment instalments could be capped at a percentage of borrower’s income, say 10%. (Those who earn below this income threshold but who want to start repaying their loans should be allowed to do so).

(iii) Removing / Reducing Interest Rate Subsidies

Currently, PTPTN charges a 1% annual interest rate on its loans under the Ujrah repayment scheme. This is far below the 4% interest rate on government housing loans borne by civil servants. The interest rate subsidy on PTPTN loans should be reduced or removed completely. Coupled with the income contingent payment, this would make PTPTN loan repayments more equitable as even if the loan holder is charged a higher interest rate, he or she would only need to start repaying once above a certain threshold income. Such policies are already in practice in the UK, where student loan holders are charged differential interest depending on income level.

(iv) Automatic deduction of PTPTN loan repayments

In order to increase loan repayment rates, repayment should be automatically deducted from the salaries of those graduates who are already eligible to service their loans. This mechanism is already in place for EPF and SOCSO contributions. It is also a common practice in countries like Australia where automatic deduction amounts are adjusted according to the amount of salary earned.

(v) Means testing PTPTN loans

Currently, the amount of money that an individual can borrow from PTPTN is contingent on his or her family income. For example, a student from a family with household income exceeding RM800 a month would be able to borrow up to 50% of the maximum loan amount. But this is still not proper means testing. Students with parents earning over RM20,000 a month, for example, would still be eligible for a PTPTN loan. PTPTN loans should be properly means tested so that those above a certain monthly income threshold e.g. RM10,000 should not be eligible to take out a loan.

1st class honours waivers have cost PTPTN over RM600 million since its inception, while the 10% / 20% discounts on early loan repayment have incurred a further RM300 million. The loan discount is a problematic policy since it benefits the well-off who have the financial ability either to pay off their children’s loans in one shot (20%) or regularly service their loans (10%). The 1st class honours waiver is also problematic since students from middle and high income families are disproportionately represented among 1st class honours holders. To increase its effectiveness, these policies should be revised. For example, the 1st class honours waiver should only be applicable to students from low-income families.

(vii) Increasing the maximum loan period

Current PTPTN policy dictates that a loan must be repaid within 5 to 15 years. Extending the length of the loan period beyond 15 years would allow struggling loan holders to reduce their monthly repayment obligations and so ease their financial burdens.

(viii) Shifting some of the loan burden to the private sector

Rather than relying totally on PTPTN to provide student loans, the government should shift part of the burden to the private sector. On its part, the government can provide loan guarantees similar to the My First Home financing scheme for first time homebuyers, whereby 10% of the total loan amount is guaranteed by CAGAMAS.[2]

(ix) Consider a larger reform of the higher education sector

While the paper has focused directly on PTPTN, the government’s strategic plans concerning higher education also have a significant impact on the agency’s financial position. For example, the government envisions a rapid expansion in the number of students in IPTS but it has given little thought as to how these students will fund themselves, and the likely impact of this increase on demand for PTPTN loans. An attempt to address PTPTN’s underlying problems should incorporate a fundamental review of the current Higher Education Blueprint, including re-examining the balance between IPTA and IPTS students, their respective funding models and assessing the quality of these higher education institutions.

Will these measures be sufficient to address PTPTN’s woes? One cannot say for sure but if nothing is done, then PTPTN’s balance sheet will continue to be a ticking time bomb that is just waiting to explode.

Media Statement by Dr. Ong Kian Ming, MP for Serdang, on the 8th of December, 2016

Did the Ministry of Education try to rig the PISA 2015 sample schools in order to artificially boost Malaysia’s scores?

When the Program for International Student Assessment (PISA) 2015 results were released on the 6th of December, 2016, officials from the Ministry of Education (MOE) took pride in the fact that Malaysia’s PISA’s scores for Mathematics, Reading and Science had improved from 421, 398 and 420 respectively in 2012 to 446, 431 and 443 respectively in 2015.[1] No doubt, Ministers, Deputy Ministers and politicians from the Barisan Nasional (BN) will use the latest PISA scores as ‘proof’ that Malaysia is on the ‘right track’ when it comes to the standard of education in the country. What they would have conveniently left out is the fact that Malaysia does not feature anywhere in the 2015 PISA rankings for Mathematics, Reading and Science.

The official reason stated in the PISA report for Malaysia’s non-inclusion is:

“In Malaysia, the PISA assessment was conducted in accordance with the operational standards and guidelines of the OECD. However, the weighted response rate among the initially sample Malaysian schools (51%) falls well short of the standard PISA response rate of 85%. Therefore, the results may not be comparable to those of other countries or to results for Malaysia from previous years.”[2]

Why was it that only 51% of the schools initially chosen for the PISA test participated in the test in 2015? Was it because the Ministry of Education wanted to over-represent students from better performing schools and leave out students from low performing schools? This 51% participation rate raises many suspicions since Malaysia’s participation rate was 99.3% and 100% in PISA 2009 (151 out of 152 schools participated)[3] and PISA 2012 respectively.[4] It is hard to imagine any school principal not allowing his or her school to participate in the PISA 2015 test if the Ministry of Education had already chosen that school to be in the original sample.

One suspects that the Ministry of Education over-sampled the high performing schools in the PISA 2015 sample and excluded some of the lower performing schools from the sample. For example, according to the website of the Negeri Sembilan Department of Education[5], the 14 schools listed as the PISA 2015 sample schools include all 7 (100%) of Negeri Sembilan’s secondary-level High Performing Schools or Sekolah Berprestasi Tinggi (SBT), and all 8 (100%) of its Fully Residential Schools or Sekolah Berasrama Penuh (SBP). The average student from a SBTs or SBPs will clearly outperform an average student from a regular secondary school.

The evidence of a biased sample in favour of high performing schools can also been seen in PISA 2015’s own data on Malaysia.[6] Out of a total sample of 8861 students, 2661 or 30% were from fully residential schools (See Table 1 below). This is clearly an over sampling of students from fully residential schools since they only comprise less than 3.0% of the 15-year-old cohort in 2015.

It is highly likely that those overseeing PISA 2015 saw that the Ministry of Education in Malaysia was trying to rig the sample size in order to artificially boost its scores. Is this why Malaysia was ultimately excluded from PISA 2015 rankings? The Minister of Education should explain so that we are not fooled into thinking that all is well and good in our education system as ‘evidenced’ by the latest PISA scores.